PM reviews rupee slide, disinvestment

By Alok Mukherjee

NEW DELHI, AUG. 11. The Prime Minister, Mr. Atal Behari Vajpayee, today convened a high-level meeting of a group of Ministers to review two specific issues - the current volatility in the foreign exchange market and the public sector disinvestment process.

The meeting was called in the backdrop of the sharp plunge in the exchange rate of the rupee which has been consistently going down despite strict measures by the Reserve Bank of India (RBI). Significantly, the RBI Governor, Dr Bimal Jalan, was present at the meeting.

The second issue about disinvestment came up in the meeting since the Prime Minister is to meet top leaders of the central trade unions tomorrow. Most trade unions, including the BJP-backed Bharatiya Mazdoor Sangh (BMS), have criticised the Government's disinvestment policy.

The Union Home Minister, Mr. L.K. Advani, the Finance Minister, Mr. Yashwant Sinha, the Commerce and Industry Minister, Mr. Murasoli Maran, the Minister for Heavy Industries, Mr. Manohar Joshi, the Petroleum Minister, Mr. Ram Naik, the Railway Minister, Ms. Mamata Banerjee, the Deputy Chairman of the Planning Commission, Mr. K.C. Pant, and the Minister of State for Programme Implementation and with the additional charge of Disinvestment, Mr. Arun Shourie were present at the meeting. Senior officials of the Prime Minister's Office and Finance Ministries were present.

Without referring to the rupee situation directly, Mr. Shourie later told presspersons that the meeting discussed measures to expedite the inflow of foreign exchange into the country from various sources such as foreign direct investment (FDI), foreign institutional investors (FIIs), non-resident Indians (NRIs) and also sanctioned but unutilised loans from multilateral institutions and bilateral donors. In this context, discussions centered around faster implementation of projects on the ground so that committed FDI and other investments could flow in at a faster pace. The causes of project delays such as cumbersome land acquisition process and lack of standardisation of project documentation came up for discussion.

The meeting also discussed the role of NRIs, particularly their ``tremendous'' response to the Resurgent India Bonds which were floated soon after the Pokhran tests in May 1998 and the subsequent slackening of inflows from that source.

(Incidentally, the RBI has also asked Indian corporates who have mobilised funds abroad through Global Depository Receipts and American Depository Receipts to bring in these funds which had been parked abroad. The idea is to increase the supply of dollars so that panic buying in the forex market could be avoided.)

On the disinvestment front, the Prime Minister wanted a briefing from Mr. Shourie and other Ministers about the debate on this issue in Parliament on Thursday. In particular, he wanted to know the viewpoint of each and every party which participated, the response of the Government to these points, and the general feeling with the Cabinet on the issue since there have been differing views on disinvestment. ``The basic idea was to brief the Prime Minister for his meeting tomorrow with the trade union leaders so that he could allay their apprehensions in this context,'' Mr. Shourie said.

A connected subject also came up - the expected report of the Expenditure Reforms Commission. The Commission is expected to recommend the downsizing of staff in certain Ministries and Departments and a discussion took place on the possible stand of the Government and the process of implementation of the recommendations.

PTI reports:

Dr. Jalan said the RBI directed Indian firms to bring back proceeds from overseas issues and loans to stabilise the foreign exchange market. ``Wherever the proceeds have been there for a long time, we have asked some of them to bring it back. There is nothing new in it,'' he told reporters after an hour- long meeting with Mr. Sinha.

Dr. Jalan, however, refused to give the names of the companies which have been asked to bring back the proceeds saying it is a routine exercise for the RBI.

Record slump

NEW DELHI, AUG. 11. The rupee today plummetted to a record low of 46.05/10 to a U.S. dollar but recovered to end at 45.79/81 after the RBI talked tough to banks on bringing in export proceeds parked abroad.

The rupee opened on a weak note at 45.87/90 and breached the 46- dollar psychological barrier to dip to a historic low in early deals on a virtual scramble by corporates and importers to cover dollar positions.

- PTI

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